Method and apparatus for providing and processing installment plans at a terminal

ABSTRACT

A central controller receives from a POS terminal a purchase price and a financial account identifier. The financial account identifier specifies a financial account, such as a credit card account. The central controller, in turn, generates one or more installment plan identifiers defining installment plans for payment of the purchase price. The installment plan identifiers are based on the purchase price and/or the financial account identifier. For example, certain accounts or certain high purchase prices may merit preferred installment plans. The installment plan identifiers are transmitted to the POS terminal. A purchaser at the POS terminal selects whether he would like to pay for his purchase in installments and, if so, using which installment plan. The POS terminal generates a selection signal indicative of whether to accept any of the installment plans, and transmits the selection signal to the central controller. The central controller receives the selection signal. If the selection signal indicates acceptance of any installment plan, use of the accepted installment plan for the financial account is authorized. Thereafter, bills are generated which reflect installment charges to be paid.

The present application U.S. patent application Ser. No. 08/946,508entitled “METHOD AND APPARATUS FOR PROVIDING AND PROCESSING INSTALLMENTPLANS AT A TERMINAL” filed on Oct. 7, 1997, now U.S. Pat. No. 6,064,987is a continuation-in-part of co-pending patent application Ser. No.08/920,116, entitled “METHOD AND SYSTEM FOR PROCESSING SUPPLEMENTARYPRODUCT SALES AT A POINT-OF-SALE TERMINAL”, filed on Aug. 26, 1997, acontinuation-in-part of patent application Ser. No. 08/822,709, entitled“SYSTEM AND METHOD FOR PERFORMING LOTTERY TICKET TRANSACTIONS UTILIZINGPOINT-OF-SALE TERMINALS”, filed on Mar. 21, 1997.

FIELD OF THE INVENTION

The present invention relates to methods and apparatus for providing andprocessing installment plan options.

BACKGROUND OF THE INVENTION

Many purchasers are often unable or unwilling to pay for a desiredpurchase. The purchase may be, for example, a single high-priced item ora number of lower-priced items that together have a high purchase price.Unfortunately, the purchase price may be more than the purchaser is ableor willing to spend at the time of sale.

Credit card accounts can allow greater flexibility in paying forpurchases. When a purchase is paid for with a credit card, the purchaserneed not tender cash or otherwise immediately forego money. Instead, thepurchaser must pay the issuer of the credit card account within apredetermined period of time. Credit card accounts thereby allowpurchasers to incur costs greater than those they are able to pay at thetime of sale.

Costs that are “charged” (paid for using a credit card account) areadded to a “balance” of the account. The purchaser may pay the balancewith a single payment or in several smaller payments made over a periodof time. Many purchasers prefer paying several smaller payments, insteadof a single, larger payment. In return for allowing the purchaser to payover a period of time, the issuer imposes interest on the balance.Typically, the balance is incremented by a predetermined interest rateat regular intervals, such as each month. In summary, payment amountsare subtracted from the balance, while interest and additional chargedcosts are added to the balance.

Each credit card account typically has a balance limit that is set bythe issuer in order to deter or prevent a purchaser from incurring anunduly high balance. Exceeding the balance limit may not be allowed, ormay impose a substantial penalty fee. Without such a balance limit, apurchaser may charge so many costs that the balance becomes unduly high.Consequently, the purchaser may not be able or willing to pay for thebalance, and thus the issuer will not receive payments that are due.

The restrictions imposed by the balance limit are another reason whymany purchasers are often unable or unwilling to pay for a desiredpurchase. Many purchasers are reluctant to maintain a balance that isnear the balance limit, for fear of exceeding the balance limit. Inaddition, the purchaser may worry that a necessary but unanticipatedpurchase may not be allowed. For example, if a credit card account has abalance limit of $5,000 and a balance of $4,500, an “emergency” purchaseof $1000 may not be allowed if exceeding the balance limit is forbidden.

Some sellers allow selected items to be paid for in a number of periodicpayments (“installments”), rather than in one payment at the time ofsale, as is more common. In return, the seller typically imposes a rateof interest on the purchase price, and interest thereby forms a part ofeach installment payment. For example, a seller may allow purchasers topay for a $100 item with three installments of $35 per month. The sellerreceives 3×$35=$105 after the three installments are paid, whichrepresents the $100 purchase price and $5 interest. Such smallerperiodic payments are preferable to many purchasers, who may not be ableto pay a single large payment.

Unfortunately, such installment-type payment plans (“installment plans”)suffer from several drawbacks. For example, a seller must be assuredthat a purchaser is financially reliable, otherwise one or moreinstallments may not be received. Therefore, the purchaser typicallymust obtain and complete a credit application, undergo a credit checkand await credit approval, which is annoying and inconvenient to thepurchaser.

The seller is likewise inconvenienced by establishing such installmentplans, processing credit applications, policing nonpayment ofinstallments and incurring various other expenses. It is inconvenient tobill each month, and economically unfeasible to bill each month forsmall amounts. In addition, it is difficult for a seller to collect baddebt (unpaid installments), especially since most sellers are notaccustomed to collecting bad debt.

Overall, such installment plans can be expensive for the seller andannoying to the purchaser. Consequently, not all sellers allowinstallment payments, and those that do typically allow installmentpayments only for a limited selection of high-priced items, rather thanfor each item. Sellers rarely, if ever, allow installment payments onlower-priced purchases since the benefits to the seller are believed tobe outweighed by the costs.

Banco Bilbao Vizcayo (“BBV”) is a credit card issuer that allows somepurchasers to pay their account balances in installments. A purchasernegotiates via telephone with a BBV representative to establish anacceptable installment plan, if possible, at a time after purchases arepaid for. Since the installment plan is established after purchases arepaid for, the purchaser does not know at the time of sale whetherinstallment payments will even be allowed. In addition, the purchaserdoes not know at the time of sale what interest rate will be applied ifinstallment payments are allowed. Consequently, at the time of sale thepurchaser may not be able to determine whether the purchase price isacceptable, even with an installment plan. In summary, negotiating withBBV to pay for an existing balance in installments cannot permitpurchasers to make informed purchasing decisions at the time of sale.

Many banks provide loans, wherein the loan may be used to pay forvarious purchases. Such loans are typically repaid in fixedinstallments. Unfortunately, requesting and obtaining such loans isexpensive and time-consuming, and loans may not be dispensed frequently.In addition, interest accumulates on the entire loan amount, so it isnot efficient to use such loans to pay for frequent and varyingpurchases.

Some credit card issuers offer pre-approved loans in which installmentpayments of the loan are applied to the credit card account balance.Such pre-approved loans are typically offered only to purchasers withstrong credit histories. In addition, the offered loan is typically alarge amount of money, such as thousands of dollars. Thus, as describedabove, it is not efficient to use such loans to pay for frequent andvarying purchases. Accordingly, the usefulness of such a loan is limitedfor smaller purchase prices.

It would be advantageous to provide a method and apparatus that allowedpurchasers to pay for a variety of purchases in installments. Such amethod and apparatus would ideally overcome the drawbacks of knowninstallment plans.

SUMMARY OF THE INVENTION

It is an object of the present invention to provide methods andapparatus for allowing purchasers to select an installment plan forpurchases at a time of sale.

In accordance with the present invention, a central controller receivesfrom a POS terminal a purchase price and a financial account identifier.The financial account identifier specifies a financial account, such asa credit card account. The central controller, in turn, generates one ormore installment plan identifiers indicating installment plans forpayment of the purchase price. The installment plan identifiers arebased on the purchase price and/or the financial account identifier. Forexample, certain accounts or certain high purchase prices may meritpreferred installment plans. The installment plan identifiers aretransmitted to the POS terminal.

A purchaser at the POS terminal selects whether he would like to pay forhis purchase in installments and, if so, using which installment plan.The POS terminal generates a selection signal indicative of whether toaccept any of the installment plans. In other words, the selectionsignal indicates a selected one of the installments plans (if thepurchaser desires to pay in installments) or that no installment planwas selected. The POS terminal then transmits the selection signal tothe central controller.

The central controller receives the selection signal. If the selectionsignal indicates acceptance of any installment plan, use of the acceptedinstallment plan for the financial account is authorized. Thereafter,bills are generated which reflect installment charges to be paid. Thus,the purchaser may afford more purchases than otherwise possible, and mayutilize such installment payments for purchases bought at many sellers.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a schematic illustration of an apparatus for providinginstallment plan options provided in accordance with the presentinvention.

FIG. 2 is a schematic illustration of a store of the apparatus of FIG.1.

FIG. 3 is a schematic illustration of a POS terminal of the store ofFIG. 2.

FIG. 4 is a schematic illustration of a central controller of FIG. 1.

FIG. 5A is a schematic illustration of a purchaser database of thecentral controller of FIG. 4.

FIG. 5B is a schematic illustration of a transaction database of thecentral controller of FIG. 4.

FIG. 5C is a schematic illustration of an installment plan database ofthe central controller of FIG. 4.

FIG. 5D is a schematic illustration of a record of a purchaser billingdatabase of the central controller of FIG. 4.

FIG. 5E is a schematic illustration of an installment payments databaseof the central controller of FIG. 4.

FIG. 5F is a schematic illustration of a merchant database of thecentral controller of FIG. 4.

FIG. 6 is a schematic illustration of exemplary records of the databasesof FIGS. 5A through 5F.

FIG. 7 is a flowchart illustrating a process for allowing a purchaser toselect an installment plan.

FIG. 8 is a flowchart illustrating steps of the process of FIG. 7 thatare performed by a POS terminal.

FIG. 9 is a flowchart illustrating steps of the process of FIG. 7 thatare performed by a central controller.

FIG. 10 is a flowchart illustrating a process for determining one ormore installment plans to offer a purchaser.

FIG. 11 is a schematic illustration of a card reader of a POS terminal.

FIG. 12 is an exemplary bill generated in accordance with the presentinvention.

FIG. 13 is a flowchart illustrating a process for determining andoffering a rebate to a purchaser.

FIG. 14 is a flowchart illustrating a process for determining andoffering an upsell to a purchaser.

FIG. 15 is a flowchart illustrating a process for providing frequentflyer miles to a purchaser paying in installments.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

The present invention provides a purchaser at a point-of-sale terminalwith options for paying for a purchase. The purchaser selects between(i) charging the entire purchase price at the time of sale, as iscommon; and (ii) charging a number of installments at periodicintervals. Thus, the present invention allows credit card users tochoose installment plans at the time of sale, thereby allowingpurchasers to pay for many more purchases without exceeding thecorresponding balance limit. Even after making high-priced purchases, abalance limit is not reached as easily, and thus much more creditremains available. Purchasers may even be able to pay for high-pricedpurchases that would have otherwise been unaffordable.

The credit card issuer or credit card clearinghouse typically providesand manages such installment plans, so sellers need not incur anycharges associated with establishing and administering installmentplans. Yet, purchasers may take advantage of installment plans at anyseller that allows credit card purchases, and are not limited toselected items. Thus, the seller receives additional cash flow fromselling additional items, and replacement inventory may be quicklyacquired.

When establishing a credit card account for a purchaser, the issuertypically performs a credit check to determine a score indicating thepurchaser's “credit worthiness.” The balance limit is then set accordingto the credit worthiness, and may be adjusted thereafter. The creditcard issuer thus already has credit information for the purchaser, andhas presumably employed that information in (i) granting the credit cardaccount to the purchaser, (ii) setting the account balance limit, and/or(iii) setting an interest rate of the account. Thus, in the presentinvention no additional costs need be incurred in reevaluating thecredit worthiness of the purchaser.

Further, the present invention does not require any additional effort bythe seller, who typically has no information on the credit-worthiness ofthe purchaser. The seller receives the full purchase price at the timeof purchase regardless of whether the purchaser chooses to pay hiscredit card account balance in installments, so the seller is notdisadvantaged. In addition, since the seller need not perform anyadditional steps in offering installment plans, purchasers may takeadvantage of the present invention when paying for items from any sellerthat permits credit card transactions.

Of further benefit is that after being exposed to the installmentoptions, the purchaser learns to associate corresponding monthly paymentamounts with a purchase price. Thus, the purchaser can eventually becomeable to determine whether an item is likely to be affordable, evenbefore the POS terminal provides installment plan options for a specificpurchase.

Referring to FIG. 1, an apparatus 10 comprises a central controller 12connected to each of stores 14, 16 and 18. As described in detail below,the stores 14, 16 and 18 are sellers that accept credit cardtransactions by purchasers, and the central controller 12 provides thestores 14, 16 and 18 with installment plan options for the purchasers atthe time of sale. Although three stores are shown in FIG. 1, it will beunderstood by those skilled in the art that the invention is applicableto one or more stores. The central controller 12 may be, for example, acontroller of (i) a credit card issuer, such as Citibank Corporation;(ii) a credit card clearinghouse, such as First Data Corporation, or(iii) a store-specific (closed network) controller, such as a controllerthat administers transactions on J. C. Penney credit cards.

Referring to FIG. 2, the store 14 of FIG. 1 is illustrated in moredetail. Stores 16 and 18 (FIG. 1) are similar to the store 14, and so adetailed illustration of each is omitted. The store 14 comprises POSterminals 20, 22 and 24, each connected to the central controller 12.The POS terminals 20, 22 and 24 are typically cash registers or otherdevices at which credit cards or ATM cards are used in paying orreceiving money. Accordingly, the POS terminals 20, 22 and 24 acceptinput from credit cards or other financial accounts, and communicatewith the central controller 12 to effect the use of financial accountsin paying for purchases. One or more POS terminals may be included inthe store 14 and connected to the central controller 12.

FIG. 3 illustrates the POS terminal 20 of FIG. 2 in more detail. POSterminals 22 and 24 (FIG. 2) are similar to the POS terminal 20, and soa detailed illustration of each is omitted. The POS terminal 20comprises a POS processor 30, such as one or more conventionalmicroprocessors, which is connected to each of a card reader 32 forreading input from credit cards and a data storage device 34, such as aRAM, floppy disk, hard disk or combination thereof. The POS processor 30is also connected to the central controller 12 of FIG. 1.

The POS processor 30 and the storage device 34 may each be (i) locatedentirely within a single computer or other computing device; (ii)connected to each other by a remote communication link, such as a serialport cable, telephone line or radio frequency transceiver; or (iii) acombination thereof. For example, the POS terminal 20 may comprise oneor more computers connected to a remote server computer for maintainingdatabases. The card reader 32 may be any of several known devices thatallow a credit card to be passed (“swiped”) therethrough, therebypermitting information stored on the credit card to be read. One suchcard reader is an OMNI 490, sold by VeriFone Inc.

The storage device 34 stores (i) a program 36 for controlling the POSprocessor 30, and (ii) an inventory database 38 for storing item prices.The program 36 drives the POS processor 30 to operate in a manner knownin the art, and particularly to calculate item prices and aggregatethose prices to determine purchase prices. The program 36 also includesprogram elements that may be necessary, such as “device drivers” forinterfacing with the card reader 32 and/or computer peripheral devices.Appropriate device drivers and other necessary program elements areknown to those skilled in the art, and need not be described in detailherein.

The inventory database 38 permits item prices to be determined, andthereby permits a purchase price of several items to be determined. Inembodiments where there is more than one POS terminal for a store, theinventory database of each POS terminal may be stored on a singledatabase server in communication with the POS processor of each POSterminal. Thus, each POS processor may access common item price data.

FIG. 4 illustrates the central controller 12 of FIG. 1 in more detail.The central controller 12 comprises a controller processor 40, such asone or more conventional microprocessors, which is connected to a datastorage device 42, such as a RAM, floppy disk, hard disk or combinationthereof. The controller processor 40, and thus the central controller12, is further connected to the POS processors 20, 22 and 24 of FIG. 2.The controller processor 40 and the storage device 42 may each be (i)located entirely within a single computer; (ii) connected to each otherby a remote communication link, such as a serial port cable, telephoneline or radio frequency transceiver; or (iii) a combination thereof. Forexample, the central controller 12 may comprise one or more computersconnected to a remote server computer for maintaining databases.

The storage device 42 stores (i) a program 44 for controlling thecontroller processor 40 in accordance with the present invention, andparticularly in accordance with the processes described in detail below;(ii) a purchaser database 46 for storing purchaser records; (iii) atransaction database 48 for storing past credit card purchases; (iv) aninstallment plan database 50 for storing installment plan options; (v) apurchaser billing database 52 for storing billable charges; (vi) aninstallment payments database 54 for storing total installment paymentsmade; and (vii) a merchant database 56 for storing merchant records.

The program 44 includes program elements that may be necessary, such as“device drivers” for interfacing with computer peripheral devices.Appropriate device drivers and other necessary program elements areknown to those skilled in the art, and need not be described in detailherein. Each of the databases 46, 48, 50, 52, 54 and 56 are described indetail below and depicted with exemplary entries in the accompanyingdrawings. The schematic illustrations and accompanying descriptions ofthe databases presented herein are exemplary arrangements for the storedinformation. As will be understood by those skilled in the art, a numberof other arrangements may be employed besides the tables shown in thedrawings.

Referring to FIG. 5A, the purchaser database 46 stores entries 57, 58and 59, each having a credit card account number 60 which uniquelyindicates an account. Each of the entries 57, 58 and 59 further has aname 61, an address 62, an account balance limit 63 and an accountbalance 64. Each entry of the purchaser database 46 thus defines acredit card account and associated purchaser.

Referring to FIG. 5B, the transaction database 48 stores entries 70, 72and 74, each having a transaction identifier 76 which uniquely indicatesa credit card account transaction. Each of the entries 70, 72 and 74further has a credit card account number 78 identifying an account onwhich the transaction occurred, a date of the transaction 80, aninstallment plan identifier 82 for indicating an installment plan, ifany, applied to the transaction, a merchant identifier 84 specifying amerchant at which the transaction occurred, and a purchase price 86 ofthe transaction.

Referring to FIG. 5C, the installment plan database 50 stores entries90, 92 and 94, each having an installment plan identifier 96 whichuniquely indicates a different installment plan. Each of the entries 90,92 and 94 further has a term 98 indicating the number of payments to bemade under the installment plan, an interest rate 100 of the installmentplan, and a required purchase price 102 at which the installment planmay be utilized.

Referring to FIG. 5D, a record 108 of the purchaser billing database 52(FIG. 4) illustrates billable transactions for an account defined by acredit card account number 109. A billable transaction is a charge thatwill typically appear on a purchaser's bill. For example, if atransaction having a purchase price of $1,000 is to be paid for ininstallments, the total purchase price of $1,000 does not appear as acharge on the bill. Instead, each of the installments appears as acharge on subsequent bills. Each such installment is generated based onthe initial transaction purchase price, and stored in the purchaserbilling database 52 (FIG. 4). In addition, since each of theinstallments are generated based on the initial transaction, it may bedesirable that each installment have a transaction identifier related tothat of the initial transaction. For example, if the initial transactionhas a transaction identifier “555”, the corresponding installments mayhave transaction identifiers “555-1”, “555-2”, and so on.

Typically, the purchaser billing database 52 (FIG. 4) includes aplurality of records such as the record 108. Each such record indicatesthe billable transactions for a different credit card account. Therecord 108 includes entries 110, 112 and 114. Each of the entries 110,112 and 114 defines a billable transaction for the account, and isuniquely identified by a transaction identifier 116 corresponding to atransaction identifier 76 of the transaction database 48 (FIG. 5B).Accordingly, based on the transaction identifier 116, informationcorresponding to the transaction may be determined from the transactiondatabase 48 (FIG. 5B). Alternatively, each of the entries 110, 112 and114 may include corresponding information from the transaction database48, such as the transaction date 118, the billable charge 120 andmerchant identifier 122. Further, a transaction description 124 thatdescribes the transaction may be stored. It will be understood that thebillable charge 120 represents an installment amount when thecorresponding transaction is an installment payment.

Referring to FIG. 5E, the installment payments database 54 storesentries 130, 132 and 134, each corresponding to a transaction that hashad an installment plan applied thereto. Each of the entries 130, 132and 134 has a credit card account number 136 indicating the account onwhich the transaction was made, a purchase price 138 of the transaction,a transaction identifier 140 uniquely identifying the transaction, andan installment plan identifier 142 indicating the applicable installmentplan. Each of the entries 130, 132 and 134 further has a number ofpayments made 144 indicating the number of installments received for thetransaction, and an installment amount 146 indicating the amount of eachinstallment.

Referring to FIG. 5F, the merchant database 56 stores entries 150, 152and 154, each indicating a seller which may communicate with the centralcontroller 12 (FIG. 1). Each of the entries 150, 152 and 154 has amerchant identifier 156 uniquely indicating each seller, a merchant name158 and a merchant address 160. If the central controller is acontroller which communicates with only one seller, the merchantdatabase may not need to be used.

FIG. 6 illustrates exemplary records used in establishing and utilizingan installment plan for a purchase. A purchaser database 200, which isan embodiment of the purchaser database 46 of FIG. 5A, stores an account“1111-1111-1111-1111”. A transaction database 210, which is anembodiment of the transaction database 48 of FIG. 5B, stores atransaction “130456” on the account “1111-1111-1111-1111”. As alsoillustrated by the transaction database 210, the transaction “130456” isfor a purchase price of $435.97 from a seller (merchant) “12456”, and isto be paid for using installment plan “B”. A merchant database 215,which is an embodiment of the merchant database 56 of FIG. 5F, stores aname and address of the seller “12456”.

An installment plan database 220, which is an embodiment of theinstallment plan database 50 of FIG. 5C, stores a description of theinstallment plan “B”. As illustrated in FIG. 6, purchase prices ofbetween $250 and $1,000 may be paid for using installment plan “B”. Suchpurchase prices are repaid in 24 monthly installments at an interestrate of 15%.

A purchaser billing database 230, which is an embodiment of thepurchaser billing database 52 of FIG. 4, stores a billable transactionfor the account “1111-1111-1111-1111”. As illustrated, the billabletransaction represents an installment payment of $21.14 that is due inconnection with the transaction “130456” illustrated in the transactiondatabase 210. The billable transaction is identified by “130456-B-1”,indicating that it represents the first payment under installment plan“B” of the transaction “130456”.

An installment payments database 240, which is an embodiment of theinstallment payments database 54 of FIG. 5E, stores the number ofpayments made (zero payments) towards the transaction “130456”. Based onthe number of payments made, it may be determined whether, or how many,installments remain to be paid. Therefore, based on the installmentpayments database 240, it may be determined whether additional billabletransactions will appear on subsequent bills.

Referring to FIG. 7, a method 300 illustrates in simplified form anembodiment of a process for allowing a purchaser to select aninstallment plan for purchases at a time of sale. The method includessteps 302 that are performed by a POS terminal, as well as steps 304that are performed by the central controller. A purchase is processed ata POS terminal (step 306) in a known manner. For example, one or moreitems are recorded at the POS terminal, and a. resulting purchase priceis generated by retrieving and totaling the prices of each item.Alternatively, an amount of money may be withdrawn at a POS terminal,such as an automated teller machine (ATM), and thus the generatedpurchase price is the withdrawn amount plus ATM fees, if any. A creditcard account number is also generated, for example, by swiping a creditcard through a card reader.

The purchase price and account number are transmitted to the centralcontroller, which determines installment plan options (step 308) andgenerates corresponding installment plan identifiers. Each installmentplan identifier indicates an installment plan for payment of thepurchase price. For example, an installment plan identifier may be aninterest rate and number of payment periods, or may be a pointer to anentry in a database where such information is stored.

The installment plan identifiers are transmitted to the POS terminal,providing the purchaser with the installment plan options to select. Thepurchaser selects one installment plan (step 310), if desired, and thisselection is transmitted to the central controller. The selectedinstallment plan, if any, is stored (step 312) and subsequently used ingenerating bills for the purchaser (step 314).

FIG. 8 illustrates a process 320 that describes in greater detail thesteps of FIG. 7 which are performed by the POS terminal. As describedabove, the POS terminal generates a purchase price (step 322) and afinancial account identifier (step 324), such as a credit card number,for specifying a financial account. The purchase price and the financialaccount identifier are transmitted to the central controller (step 326).The POS terminal may also transmit a merchant identifier specifying theseller controlling the POS terminal and/or product codes indicating eachitem.

In response, the POS terminal receives one or more installment planidentifiers, each specifying an installment plan for payment of thepurchase price (step 328) and displays signals indicative of eachinstallment plan. For example, the POS terminal may display monthlypayment amounts and a number of months for each installment plan. ThePOS terminal generates a selection signal indicative of whether toaccept one of the installment plans (step 330). The selection signalthus indicates (i) a selected one of the installment plans, or (ii) thatno installment plan was selected (e.g., if the purchaser does not wishto pay in installments). The selection signal may be generated by asingle choice (e.g., selecting from “plan A”, “plan B” and “no plan”.Alternatively, the selection signal may include (i) a first selectionindicating whether an installment plan is desired, and (ii) a secondselection indicating a selected installment plan if the first selectionindicates the installment plan is desired. In such an embodiment, thecentral controller may transmit the installment plans identifiers to thePOS terminal either before or after the first selection. The selectionsignal is then transmitted to the central controller (step 332).

FIG. 9 illustrates a process 340 that describes in greater detail thesteps of FIG. 7 which are performed by the central controller. Asdescribed above, the central controller receives the purchase price andthe financial account identifier from the POS terminal (step 342). Thecentral controller then generates at least one installment planidentifier defining an installment plan for payment of the purchaseprice (step 344). As described in greater detail below, the installmentplan, and thus the installment plan identifier, is based on at least oneof the purchase price and the financial account identifier. Theinstallment plan identifier is then transmitted to the POS terminal(step 346).

The central controller then receives a selection signal indicative ofwhether to accept the installment plan (step 348). If the selectionsignal indicates acceptance of one installment plan (step 350), use ofthe accepted installment plan for the financial account is authorized(step 352). When use of the accepted installment plan is authorized, thepurchase price is to be repaid in installments, rather than charged on asingle bill. Calculation of installments and charging those installmentson bills are described in detail below.

Referring to FIG. 10, a process 360 is performed by the centralcontroller in determining one or more installment plans to offer apurchaser at a POS terminal. In general, the central controllerdetermines whether application of the purchase price to the financialaccount is authorized (step 362). The step 362 is also known as“authorizing the charge”, and typically comprises an evaluation ofwhether the credit card account meets approval criteria of the creditcard account issuer. Approval criteria are specific to each issuer, andmay include the following: (i) the account must be in good standing, andnot past due; (ii) applying the purchase price to the current balance ofthe account would exceed the balance limit (some issuers may approvepurchases that exceed the balance limit by a specified margin), (iii)the corresponding credit card must not have been reported stolen orlost; and (iv) the account should not be closed.

If the charge is authorized, the central controller determines whetherto allow installment payments on the purchase price (step 364).Typically, the central controller makes the determination based on thepurchase price and/or the financial account identifier. For example, thecentral controller may compare the purchase price to a predeterminedamount, and allow installment payments only if the purchase priceexceeds the predetermined amount. The central controller may alsodetermine whether the specified account has been “pre-approved” suchthat installment payments are always allowed, e.g. as determined by apurchaser score. An indication of such pre-approval may be stored, forexample, in the purchase database 46 (FIG. 4). In still anotherembodiment, each installment plan may have one or more conditions, andinstallment payments are allowed if any installment plan's conditionsare met. For example, one installment plan may have a condition that thepurchase price is between $250 and $1,000, while a second installmentplan has a condition that the total amount charged in the last month isover $2,000. Such conditions may be stored in the installment plandatabase 50 (FIG. 4).

If installment payments are allowed, one or more installment plans aredetermined and offered to the purchaser (step 366), as described above.There are several different methods for determining installment plans tooffer. For example, there may be a predetermined set of installmentplans that is offered to every purchaser. In another embodiment, the setof offered installment plans may depend on the seller. Alternatively,there may be a set of installment plan identifiers stored for one ormore purchaser entries in the purchaser database 46 (FIG. 4). In such anembodiment, the installment plan options would be “personalized” to eachpurchaser and the corresponding installment plans are in turn offered tothat purchaser.

Installment plan identifiers for each purchaser may be determined basedon a score that is predictive of purchaser behavior. The score isdetermined in accordance with a scoring system. A scoring system is amathematical model designed to provide probabilities of futureperformance based on the actual historic performance of a creditor.Models are developed from past behavior and data relationships, and themodels are used to identify predictive variables. Scoring systems can beused as absolute decision tools or in combination with judgmental andexpert system rules.

Credit card issuers currently use scores to determine: (i) who willrespond to an offer; (ii) who will reliably repay credit; and (iii) whowill generate revenue for an issuer. The above-described scores areknown as (i) response scores, (ii) risk scores and (iii) revenue scores,respectively. Response scores are used to determine how to modifysolicitations for maximum results and for areas of the country that havethe greatest growth potential for specifically designed card products,such as insurance or investment cross-sells. Risk scores are used topredict delinquencies and bankruptcies, as well as the extent and timingof monthly payments. Revenue scores are used in assigning a ranking toindividuals by the relative amount of revenue they are likely to produceover a period of time following score assignment. Revenue scores helpissuers to manage accounts by identifying inactive accounts that shouldbe targeted with an appropriate offer, and by identifying the mostdesirable prospects for acquisition.

A score may be classified as either a “credit score” or a “behaviorscore.” A credit score is a statistical measure used by issuers todetermine whether to extend credit in the form of a loan or as a creditline on a credit card account. Credit scores take into account manyfactors, including: annual income, years at current job, residence, debtpayment history, current debt obligations and long term debtobligations. Issuers may assign different weights to these criteria tocompute a credit score.

A behavior score is another statistical measure used by issuers tobetter manage accounts, thereby attempting to maximize profit earned peraccount. The behavior score can include more than 50 differentcharacteristics, including: extent of monthly payments, promptness ofpayment, use of card for purchases or cash advances, size and type ofpurchases and types of spending categories among others.

Offering the installment plans to the purchaser typically includesdisplaying signals indicative of the installment plans. For example, asshown in FIG. 11, a card reader 370 of a POS terminal has a displayregion 372 that shows text indicating monthly payment amounts and anumber of installments for each of three installment plans. To selectone of the three installment plans, the purchaser would press acorresponding number on a keypad 374. To reject all installment plans,the purchaser would press another number key (“1” in FIG. 11) indicatingthat the purchase price will be applied to the account in one chargeinstead of in several installment charges.

When an installment plan is selected and transmitted to the centralcontroller, the central controller calculates the amount of thecorresponding installments based on purchase price, the interest rateand the number of installments. Financial calculations of this type arewell known, and described in Chapter Three of “Principles of CorporateFinance, Fourth Edition”, by Richard A. Brealey and Stewart C. Myers,incorporated herein by reference as part of the present disclosure. Aninstallment appears as a charge on subsequent bills until allinstallments have been paid. The first installment may appear on thenext bill (e.g., next month), or may alternatively appear after apredetermined “grace period” has elapsed. For example, it may bedesirable that installment payments begin six months after acorresponding transaction.

Many accounts have a minimum payment amount that a purchaser must payeach billing cycle. In some embodiments, the minimum payment amount maybe increased by the amount of each billed installment. Consequently, thecredit card issuer is assured that both the original minimum paymentamount and the installment are received each billing cycle.

Referring to FIG. 12, an exemplary bill 400 for account number“1111-1111-1111-1111” is illustrated. The bill 400 includes charges 402,404 and 406, of which the charge 406 is an installment charge. The billfurther includes a minimum payment amount 408, which is the sum of theamount 410 of the installment charge 406 and an “original” minimumpayment amount 412 due without any installment charges.

Typically, a purchaser receives a bill and submits payment therefor.Each installment payment that the purchaser makes is recorded, allowingthe central controller to determine (i) the number of installmentsremaining, and thus (ii) when installment payments may no longer berequested. For example, upon receiving an indication that an installmenthas been received, the central controller may increment the number ofpayments made 144 (FIG. 5E) of the installment payments database (FIGS.4 and 5E).

In other embodiments of the present invention, there may be rewardsand/or “upsells” (purchase upgrade) offered to the purchaser in exchangefor selecting an installment plan. In general, it may be desirable tooffer a reward or upsell to a purchaser as an incentive to select aninstallment plan instead of paying the purchase price at once. Forexample, a purchaser may be offered a discount (rebate) off the purchaseprice if an installment plan is selected. It will be understood thatalthough a discount may be applied to a purchase price, and thepurchaser thus pays a reduced purchase price, the merchant wouldtypically be credited with the original (not reduced) purchase price.Alternatively, the purchaser may be offered a cash payment from a cashregister, frequent flyer miles or a product related to the purchasedproduct in exchange for selecting an installment plan. In someembodiments, the offered reward or upsell may be based on the purchaseprice, the purchaser, and/or an item purchased. In other embodiments,the offered reward or upsell is predetermined, regardless of otherfactors.

FIG. 13 illustrates a process 420 for determining and offering a rebateto a purchaser. The central controller transmits installment plans tothe POS terminal (step 422).

Each installment plan has a corresponding rebate associated therewith.For example, a first installment plan may have a corresponding $5rebate, and a second installment plan has a corresponding $20 rebate.The purchaser selects an installment plan, and thereby selects thecorresponding rebate (step 424). The purchase price is decremented bythe corresponding rebate (step 426), and the central controller thenauthorizes use of the selected installment plan to repay the decrementedpurchase price (step 428). Alternatively, rather than the steps 426 and428, a “second transaction” may be generated which indicates thatpurchaser is due a refund, and the purchaser is given “cash back” fromthe POS terminal. The central controller then authorizes use of theselected installment plan to repay the purchase price.

FIG. 14 illustrates a process 440 for determining and offering an upsellto a purchaser. The POS terminal determines, based on the purchase, anupsell to offer (step 442). For example, if a purchase includes astereo, the upsell may be a five-year warranty for the stereo. A systemfor determining and offering upsells is disclosed in co-pending patentapplication Ser. No. 08/920,116, entitled “METHOD AND SYSTEM FORPROCESSING SUPPLEMENTARY PRODUCT SALES AT A POINT-OF-SALE TERMINAL”,filed on Aug. 26, 1997.

The POS terminal receives installment plans (step 444), and displays,for each installment plan, installment amounts that are due for (i) thepurchase, and (ii) the purchase and upsell combination (step 446). Forexample, the POS terminal may display:

With installment plan A: stereo = stereo and warranty = $10 per month;$11 per month With installment plan B: stereo = stereo and warranty = $5per month; $6 per month

A price of the upsell may be fixed or based on the selected installmentplan. The upsell price may also be a price that causes the installmentamount of the purchase-upsell combination to be an integral dollaramount, a multiple of five dollars, or any other desired value. Theupsell price thus affects the installment amounts of the purchase-upsellcombinations, and may be calculated in the same manner as describedabove. The purchaser selects an installment plan and whether the upsellis also desired (step 448). If the upsell is desired (step 450), thenthe purchase price is incremented by the upsell price (step 452). Use ofthe selected installment plan to repay the purchase price is authorized(step 456), as described above.

Rewards and upsells may be offered to the purchaser in exchange forcompleting all payments for an installment plan, instead of prepayingthe balance or defaulting on an installment payment. FIG. 15 illustratesa process 460 for providing frequent flyer miles to such a purchaserpaying in installments. When an installment is received (step 462), afrequent flyer reward is increased, based on the number of payments made(step 464). For example, each payment made may increase the reward by100 frequent flyer miles, or may double the number of accumulatedfrequent flyer miles. Alternatively, the initial payments may increasethe reward by small amounts, or not at all, and only the last paymentincreases, or determines, the reward.

If the purchaser desires to receive any of the accumulated frequentflyer miles (step 466), the reward is issued (step 468) and in turnreduced to zero (step 470). If any installment payments remain due (step472), the central controller waits to receive subsequent installments(step 462). If no payments remain, any reward remaining is issued to thepurchaser (step 474).

Although the present invention has been described with respect to apreferred embodiment thereof, those skilled in the art will understandthat various substitutions may be made to those embodiments describedherein without departing from the spirit and scope of the presentinvention. For example, it will be understood that all of theinstallment payments which are due need not be equal.

What is claimed is:
 1. An apparatus, comprising: means for receivinginformation specifying at least a purchase price and a financial accountidentifier, the financial account identifier identifying a financialaccount; means for generating, in response to receiving the at least oneof the purchase price and the financial account identifier, aninstallment plan identifier identifying an installment plan for paymentof the purchase price, wherein the installment plan identifier is basedon at least one of the purchase price and the financial accountidentifier; and means for transmitting the installment plan identifier.2. The apparatus of claim 1, further comprising: means for receiving aselection signal indicative of whether to accept the installment plan;and means for authorizing use of the installment plan for the financialaccount if the selection signal indicates acceptance of the installmentplan.
 3. The apparatus of claim 2, further comprising: means foradjusting the purchase price if the selection signal indicatesacceptance of the installment plan, wherein the installment plan is usedfor payment of the adjusted purchase price.
 4. The apparatus of claim 1,wherein the means for generating an installment plan identifier furthercomprises: means for generating a plurality of installment planidentifiers, each defining an installment plan for payment of thepurchase price, the plurality of installment plan identifiers beingbased on at least one of the purchase price and the financial accountidentifier; and wherein the means for transmitting further comprisesmeans for transmitting the plurality of installment plan identifiers. 5.The apparatus of claim 4, further comprising: means for receiving aselection signal indicative of whether to accept any one of theplurality of installment plans; and means for authorizing use of theaccepted installment plan for the financial account if the selectionsignal indicates acceptance of one of the plurality of installmentplans.
 6. The apparatus of claim 1, further comprising: means fordetermining whether to allow installment payments on the purchase price;and wherein the means for generating the installment plan identifiergenerates an installment plan identifier only if installment payments onthe purchase price are allowed.
 7. The apparatus of claim 6, wherein themeans for determining whether to allow installment payments furthercomprises: means for determining whether to allow installment payments,based on at least one of the purchase price and the financial accountidentifier.
 8. The apparatus of claim 6, wherein the means fordetermining whether to allow installment payments comprises: means forcomparing the purchase price to a predetermined amount; and means fordetermining to allow installment payments only if the purchase priceexceeds the predetermined amount.
 9. The apparatus of claim 1, furthercomprising: means for determining whether application of the purchaseprice to the financial account is authorized; and wherein the means forgenerating the installment plan identifier generates the installmentplan identifier only if application of the purchase price is authorized.10. The apparatus of claim 1, further comprising: means for receiving amerchant identifier indicating a merchant from which the purchase priceand the financial account identifier were received; and means forcrediting the purchase price to the merchant.
 11. The apparatus of claim1, further comprising: means for determining an upsell to offer; meansfor generating an upsell identifier defining the upsell to offer; andmeans for transmitting the upsell identifier.
 12. The apparatus of claim11, further comprising: means for receiving a response signal indicatingwhether the upsell was accepted.
 13. The apparatus of claim 11, whereinthe means for determining an upsell to offer comprises means fordetermining an upsell to offer based on at least one of the purchaseprice and the financial account identifier.
 14. The apparatus of claim12, further comprising: means for determining an upsell price; and meansfor applying the purchase price to the financial account if the upsellwas accepted.
 15. The apparatus of claim 14, further comprising: meansfor receiving a merchant identifier indicating a merchant from which thepurchase price and the financial account identifier were received; andmeans for crediting the upsell price to the merchant.
 16. The apparatusof claim 1, wherein the financial account identifier specifies a creditcard account.
 17. The apparatus of claim 1, wherein the installment planidentifier is based on an average number of transactions over apredetermined period.
 18. The apparatus of claim 1, wherein theinstallment plan identifier is based on an account holder behaviorscore.
 19. The apparatus of claim 1, wherein the installment planidentifier is based on an account holder profitability score.
 20. Theapparatus of claim 1, wherein the installment plan identifier is basedon an account holder credit score.
 21. The apparatus of claim 1, whereinthe installment plan identifier is based on an account holderperformance score.
 22. The apparatus of claim 1, wherein the installmentplan identifier is based on preference data generated by an accountholder, the preference data representing finance option preferences. 23.An apparatus, comprising: means for receiving information specifying atleast a purchase price and a financial account identifier, the financialaccount identifier identifying a financial account; means forgenerating, in response to receiving the at least one of the purchaseprice and the financial account identifier, an installment planidentifier identifying an installment plan for payment of the purchaseprice, wherein the installment plan identifier is based on at least oneof the purchase price and the financial account identifier; and meansfor receiving an indication of an acceptance of the installment plan.24. An apparatus, comprising: means for receiving information specifyingat least a purchase price and a financial account identifier, thefinancial account identifier identifying a financial account; means forgenerating, in response to receiving the at least one of the purchaseprice and the financial account identifier, an installment planidentifier identifying an installment plan for payment of the purchaseprice, wherein the installment plan identifier is based on at least oneof the purchase price and the financial account identifier; means fordetermining an upsell to offer; means for generating an upsellidentifier defining the upsell; and means for transmitting theinstallment plan identifier and the upsell identifier.